County of Stanislaus, California

Transcription

1 , California Comprehensive Annual Financial Report For the Fiscal Year Ended Prepared by Stanislaus County Auditor-Controller s Office Lauren Klein, CPA, Auditor-Controller

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3 , California Comprehensive Annual Financial Report Fiscal Year Ended Prepared by Stanislaus County Auditor-Controller s Office Lauren Klein, CPA, Auditor-Controller

4 Comprehensive Annual Financial Report For the Fiscal Year Ended Table of Contents Introductory Section Letter of Transmittal... I Board of Supervisors... VIII Principal County Officials... IX Organizational Chart... X Certificate of Achievement for Excellence in Financial Reporting... XI Financial Section Independent Auditor s Report... 1 Management s Discussion and Analysis (Required Supplementary Information)... 5 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Governmental Funds: Balance Sheet Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual on Budgetary Basis: General Fund Behavioral Health and Recovery Services Special Revenue Fund Community Services Agency Special Revenue Fund In-Home Supportive Services Special Revenue Fund 33 Proprietary Funds: Statement of Net Position Statement of Revenues, Expenses and Changes in Fund Net Position Statement of Cash Flows Fiduciary Funds: Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Notes to the Basic Financial Statements... 41

5 Comprehensive Annual Financial Report For the Fiscal Year Ended Required Supplementary Information: Other Postemployment Benefits (OPEB) Plan Schedule of Funding Progress Schedule of County s Proportionate Share of Net Pension Liability & Schedule of County s Contributions Other Supplementary Information: Nonmajor Governmental Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual on Budgetary Basis Nonmajor Enterprise Funds: Combining Statement of Net Position Combining Statement of Revenues, Expenses and Changes in Fund Net Position Combining Statement of Cash Flows Internal Service Funds: Combining Statement of Net Position Combining Statement of Revenues, Expenses and Changes in Fund Net Position Combining Statement of Cash Flows Agency Funds: Statement of Changes in Fiduciary Assets and Liabilities Successor Agency to the Stanislaus County Redevelopment Agency Statistical Information Government-wide: Net Position by Component Changes in Net Position Governmental Activities - Tax Revenues by Source Fund Information: Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Property Taxes: Net Assessed and Estimated Actual Value of Taxable Property Property Tax Rates and Distributions of General Levy Property Tax Rate Among Direct and Overlapping Governments Principal Property Taxpayers Property Tax Levy and Collections Debt Capacity: Ratios of Outstanding Debt by Type Legal Debt Margin Information Demographic and Economic Information Demographic and Economic Statistics Principal Employers Full-time Employees by Function Operating Indicators by Function/Program Miscellaneous Statistical Data

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14 COUNTY OF STANISLAUS PRINCIPAL COUNTY OFFICIALS JUNE 30, 2018 Board of Supervisors Kristen Olsen District 1 Vito Chiesa District 2 Terry Withrow District 3 Dick Monteith District 4 Jim DeMartini District 5 VIII

15 COUNTY OF STANISLAUS PRINCIPAL COUNTY OFFICIALS JUNE 30, 2018 Elected Officials Assessor... Don H. Gaekle Auditor-Controller... Lauren Klein Clerk-Recorder... Lee Lundrigan District Attorney... Birgit Fladager Sheriff-Coroner and Public Administrator... Adam Christiansen Treasurer and Tax Collector (Interim)... Lauren Klein Appointed Department Heads Agricultural Commissioner & Sealer of Weights & Measures... Milton O Haire Animal Services Executive Director... Annette Patton Area Agency on Aging/Veterans Services Office Director... Margie Palomino Behavioral Health & Recovery Services Director... Rick DeGette Chief Executive Officer... Jody Hayes Child Support Services Director... Baljit Atwal Children and Families Commission, Executive Director... David Jones Community Services Agency Director... Kathryn Harwell Cooperative Extension County Director & Nutrition, Family Consumer Science Advisor... Roger Duncan County Counsel... John P. Doering Environmental Resources Director... Jami Aggers General Services Agency... Keith D. Boggs Health Services Agency Managing Director... Mary Ann Lee Librarian... Diane McDonnell Parks and Recreation Director... Jami Aggers Personnel Director... Tamara Thomas Planning and Community Development Director... Angela Freitas Chief Probation Officer... Mike Hamasaki Public Defender... Sandip Sandhu Public Works Director (Interim)... David Leamon Stanislaus Regional Director... Scotty Douglass Strategic Business Technology Director... Paul Gibson Workforce Development Director... Doris Foster IX

16 Stanislaus County Organizational Chart CITIZENS OF STANISLAUS COUNTY County Counsel BOARD OF SUPERVISORS CHIEF EXECUTIVE OFFICER Office of Emergency Services/ Fire Warden Clerk of the Board of Supervisors Board Priorities: Supporting Community Health Board Priorities: Supporting Strong and Safe Neighborhoods Delivering Efficient Public Services Board Priorities: Developing a Healthy Economy First-Rate Learning Delivering Community Infrastructure Aging and Veterans Services Behavioral Health and Recovery Services Child Support Services Children and Families Commission Community Services Agency Health Services Agency *Elected Officials do not report directly to the CEO and/or Board of Supervisors. This chart is for purposes of budget organization. Effective / Assessor* Auditor-Controller* Chief Executive Office Clerk-Recorder* District Attorney* General Services Agency Grand Jury Probation Public Defender Sheriff* Strategic Business Technology Agricultural Commissioner Environmental Resources Library Parks and Recreation Planning and Community Development Public Works UC Cooperative Extension Workforce Development Treasurer-Tax Collector* X

17 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Text38: Presented to California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Executive Director/CEO XI

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19 Financial Section

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21 INDEPENDENT AUDITOR S REPORT To the Honorable Grand Jury and Board of Supervisors of the, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the, California (the County), as of and for the year ended, and the related notes to the financial statements, which collectively comprise the County s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the County s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 1

22 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the County as of, and the respective changes in financial position, and, where applicable, cash flows thereof and the Respective Budgetary Comparison for the General Fund, Behavioral Health and Recovery Special Revenue Fund, Community Services Agency Special Revenue Fund, and In-Home Supportive Services Special Revenue Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, the Stanislaus County Employees Retirement Association Schedule of the County s Proportionate Share of the Net Pension Liability, Stanislaus County Employees Retirement Association Schedule of the County s Contributions, Stanislaus County Other Postemployment Benefits (OPEB) Schedule of the County s Proportionate Share of the Liability, and Stanislaus County OPEB Schedule of the County s Contributions, as listed on the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board (GASB), who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise County s basic financial statements. The introductory section, combining and individual non-major fund financial statements and schedules, long-term debt statements of the Successor Agency to the Stanislaus County Redevelopment Agency, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual non-major fund financial statements and schedules, and long-term debt statements of the Successor Agency to the Stanislaus County Redevelopment Agency are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual non-major fund financial statements and schedules, and long-term debt statements of the Successor Agency to the Stanislaus County Redevelopment Agency are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. 2

23 Implementation of New Accounting Standards As disclosed in the Note 1 to the financial statements, the County implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions; GASB Statement No. 81, Irrevocable Split-Interest Agreements; GASB Statement No. 85, Omnibus 2017; and GASB Statement No. 86, Certain Debt Extinguishment Issues, during the fiscal year Our opinion is not modified with respect to the matter. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2018, on our consideration of the County s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County s internal control over financial reporting and compliance. BROWN ARMSTRONG ACCOUNTANCY CORPORATION Bakersfield, California December 21,

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25 Management s Discussion and Analysis

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27 Management s Discussion and Analysis As management of the (County), we offer this narrative overview and analysis of the financial activities of the County for the Fiscal Year ended. Please read it in conjunction with the County s basic financial statements following this section. Financial Highlights The County s net position is $579 million and is comprised of the following items: The net investment in capital assets of $537 million The restricted net position of $318 million The net unrestricted net position of $(276) million The government s total net position decrease of $46 million is comprised of a prior period adjustment of $21 million and an unfavorable change in net position of $25 million. As of, the County governmental funds reported combined fund balances of $496 million, an increase of $19 million from the prior year. The unassigned fund balance is $7 million, which represents 1.4% of the total fund balance of the governmental funds. As of, unassigned fund balance for the General Fund was $9 million. The unassigned fund balance represents 3.0% of expenditures and transfers of the General Fund. The County s total long-term liabilities decreased by a net $41 million from the prior year. A significant portion of the decrease is due to the decrease in the in net pension liability. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the County s basic financial statements. There are three components to the County s basic financial statements: 1) Government-wide financial statements; 2) Fund financial statements; and 3) Notes to the basic financial statements. This report also contains other supplementary information. Government-wide Financial Statements are designed to provide readers with a broad overview of County finances, in a manner similar to a private-sector business. The statement of net position presents information on all County assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The statement of activities presents information showing how net position changed during the most recent Fiscal Year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of these government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the County include general government, public protection, public ways and facilities, health and sanitation, public assistance, education and recreation and cultural services. The business-type activities of the County include the Fink and Geer Road Landfills, Health 5

28 Management s Discussion and Analysis (continued) Clinics and Ancillary Services, Inmate Welfare/Commissary and Transit. The government-wide financial statements include not only the County (known as the primary government), but also legally separate entities (component units) for which the County is financially accountable. There are five component units included in these financial statements. Stanislaus County Capital Improvements Financing Authority, Stanislaus County Tobacco Funding Corporation, Stanislaus County Children and Families Commission, In-Home Supportive Services Public Authority and the Lighting Districts, although legally separate, function for all practical purposes as departments of the County and therefore, are included as an integral part of the primary government. The government-wide financial statements can be found on pages of this report. Fund Financial Statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance. All of the funds of the County can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the Fiscal Year. Such information may be useful in evaluating a county s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the governmentwide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. For the governmental funds, information is presented separately for the General Fund, Tobacco Settlement, Behavioral Health and Recovery Services, Community Services Agency, and In-Home Supportive Services. These funds qualify as major funds and are reported separately. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The County adopts an annual appropriated budget for its General Fund and most of its Special Revenue Funds. Budgetary comparison statements have been provided in this report for the General Fund and the major Special Revenue Funds. The governmental funds financial statements can be found on pages of this report. Proprietary funds are divided into two types. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses enterprise funds to account for the Fink and Geer Road Landfills, Health Clinics and Ancillary Services, Inmate Welfare/Commissary and 6

29 Management s Discussion and Analysis (continued) Transit activities. Internal service funds are an accounting device used to accumulate and allocate costs internally among the County s various functions. The County uses internal service funds to account for its selfinsurance activities, Central Services, Fleet Services, Technology and Communication, Facilities Maintenance and Morgan Shop Garage. All of these activities, except the Professional Liability Self Insurance Fund, predominantly benefit governmental functions and have been included within governmental activities in the governmentwide financial statements. The Professional Liability Insurance Fund predominantly benefits business-type functions and is included within the business-type activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The Fink Road Landfill and the Health Clinics and Ancillary Services are considered to be major funds. The County s internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The proprietary funds financial statements can be found on pages of this report. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County's programs. The accounting used for fiduciary funds is much like that used for proprietary funds except for agency funds. The fiduciary fund financial statements can be found on pages of this report. Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found on pages of this report. The combining and individual fund statements referred to earlier provide information for non-major governmental, enterprise and internal service funds and agency funds and are presented following the notes to the financial statements. Combining and individual fund statements can be found on pages of this report. 7

30 Management s Discussion and Analysis (continued) Government-Wide Financial Analysis The following table provides an analysis of the County s net position at the government wide level: Net Position Governmental Activities Business-type Activities Totals Current and other assets $ 674,057,106 $ 655,281,826 $ 79,177,476 $ 80,545,354 $ 753,234,582 $ 735,827,180 Capital assets 513,930, ,017,868 28,521,488 29,793, ,452, ,811,729 Total assets 1,187,987,924 1,164,299, ,698, ,339,215 1,295,686,888 1,274,638,909 Deferred pension 223,849, ,604,159 12,217,641 15,214, ,067, ,818,920 Total deferred outflows of resources 223,849, ,604,159 12,217,641 15,214, ,067, ,818,920 Long-term liabilities outstanding 788,703, ,731,147 34,195,807 36,343, ,898, ,074,174 Other liabilities 115,214, ,393,249 3,941,544 5,335, ,155, ,728,531 Total liabilities 903,917, ,124,396 38,137,351 41,678, ,054, ,802,705 Deferred OPEB 1,096,605-43,849-1,140,454 - Deferred pension 9,099,093 5,646, , ,021 9,478,439 5,903,784 Total deferred inflows of resources 10,195,698 5,646, , ,021 10,618,893 5,903,784 Net position: Net investment in capital assets 508,145, ,299,857 28,521,488 29,793, ,666, ,093,718 Restricted 297,938, ,608,836 20,517,119 20,969, ,455, ,578,704 Unrestricted (308,359,785) (250,775,999) 32,317,452 32,854,917 (276,042,333) (217,921,082) Total net position $ 497,724,342 $ 541,132,694 $ 81,356,059 $ 83,618,646 $ 579,080,401 $ 624,751,340 A significant portion of the County s net position, $318 million represents resources that are subject to external restrictions on how they may be used. The net unrestricted balance is a negative $276 million. The County s net position decreased by $46 million. The program related deficit was $218 million. Governmental activities expenses exceeded revenues by $206 million and business-type activities incurred a short-fall of $12 million. The program related deficit of $218 million was offset by the general revenues in the amount of $194 million, resulting in $25 million loss. The total change in net position of negative $46 million includes a prior period adjustment of negative $21 million to restate the beginning Other Post-Employment Benefits (OPEB) balance due to implementation of Governmental Accounting Standards Board (GASB) Statement No. 75. For business-type activities, the County reported a balance of $32 million in unrestricted net position, which is consistent with prior year. As noted earlier, net position may serve over time as a useful indicator of a government s financial position. In the case of the County, assets exceeded liabilities by $579 million at the close of the Fiscal Year By far the largest portion of the County s net position of $537 million (93%) reflects its investment in capital assets (e.g., land, buildings, machinery, infrastructure, and equipment), less any outstanding debt used to acquire those assets. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although 8

31 Management s Discussion and Analysis (continued) the County s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The following table indicates the changes in net position for governmental and business-type activities: Changes in Net Position Governmental Activities Business-type Activities Totals Revenues Program revenues: Charges for services $ 156,127,545 $ 149,644,889 $ 52,201,372 $ 52,782,221 $ 208,328,917 $ 202,427,110 Operating grants and contributions 587,851, ,433,610 2,411,096 1,395, ,262, ,829,189 Capital grants and contributions 10,105,017 36,710, ,105,017 36,710,716 General revenues: Property taxes 126,399, ,517, ,399, ,517,121 Sales taxes 44,802,366 36,578,957 6,022,663 6,609,799 50,825,029 43,188,756 Other taxes 3,884,785 3,898, ,884,785 3,898,466 Sale of capital assets Unrestricted investment earnings 730, , , ,720 1,592,582 1,662,165 Grants/contributions not restricted 1,190,064 1,129, ,190,064 1,129,666 Other general revenue 9,752,619 6,728, ,752,619 6,728,972 Total revenues 940,843, ,577,842 61,497,399 61,514,319 1,002,341, ,092,161 Expenses General government 92,712,210 45,365, ,712,210 45,365,643 Public protection 261,440, ,326, ,440, ,326,244 Public ways and facilities 49,081,627 36,073, ,081,627 36,073,544 Health and sanitation 161,381, ,320, ,381, ,320,780 Public assistance 366,132, ,149, ,132, ,149,912 Education 13,211,024 13,664, ,211,024 13,664,296 Recreation and cultural services 8,414,732 8,372, ,414,732 8,372,919 Interest on long-term debt 8,148,825 8,381, ,148,825 8,381,196 Landfills ,678,915 5,215,062 14,678,915 5,215,062 Health Clinics and Ancillary Services ,664,812 41,048,228 42,664,812 41,048,228 Inmate Welfare/Commissary - - 1,832,920 1,769,487 1,832,920 1,769,487 Transit - - 7,375,199 7,523,667 7,375,199 7,523,667 Total expenses 960,524, ,654,534 66,551,846 55,556,444 1,027,075, ,210,978 Net position increase (decrease) before transfers (19,680,351) (10,076,692) (5,054,447) 5,957,875 (24,734,798) (4,118,817) Transfers (3,370,262) (3,182,136) 3,370,262 3,182, Change in net position (23,050,613) (13,258,828) (1,684,185) 9,140,011 (24,734,798) (4,118,817) Net position, July 1 541,132, ,391,522 83,618,646 74,478, ,751, ,870,157 Prior period adjustment (20,357,739) - (578,402) - (20,936,141) - Net position July 1, restated 520,774, ,391,522 83,040,244 74,478, ,815, ,870,157 Net position June 30 $ 497,724,342 $ 541,132,694 $ 81,356,059 $ 83,618,646 $ 579,080,401 $ 624,751,340 9

32 Governmental Activities Management s Discussion and Analysis (continued) The Expenses and Program Revenues Governmental Activities chart compares the program expenses and revenues by function for activities funded by general revenues such as taxes. Expenses incurred in the Public Assistance category totaled over $366 million and $261 million was expended for Public Protection. The most significant program revenue is included in the Public Assistance activities. Total program expenses amounted to approximately $960 million, offset by total revenue of approximately $754 million. The total revenues by funding source are represented by the Revenues by Source - Governmental Activities chart. This chart combines program and general revenues, such as taxes. The Operating Grants/Contributions category, which includes intergovernmental revenue sources, represents the highest funding source at 62.77% of the total resources. Charges for Services represent 16.46%. The Other category includes donations and miscellaneous revenue and comprises 1.03% of the funding sources. 10

33 Business-Type Activities Management s Discussion and Analysis (continued) The following Expenses and Program Revenues Business-Type Activities chart highlights the County s business-type program expense categories and offsetting revenue for By far, Health Clinics and Ancillary Services is the largest category with over $43 million in expenses. The Health Clinics and Ancillary Services division of the Health Services Agency provides a variety of health care services to the local community. All other categories of costs combine for a total of approximately $23 million, with Transit and Landfills making up the bulk of costs. The Businesstype costs totaled nearly $67 million, while the program revenue was recorded at $55 million. The Revenues by Source Business-type Activities illustrates the total funding source by category. The business-type activities are reported in the Enterprise funds which includes revenue fees for services. Consequently, the most significant source of funding was noted in the category of Charges for Services, recognizing 84.9% of the total revenue earned. Funding from Operating Grants represents 3.9% of the total funding sources as the intergovernmental revenues, Federal and State, comprise a very low portion of the revenues generated in the business-type activities. 11

34 Management s Discussion and Analysis (continued) Financial Analysis of the County s Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The general government functions are contained in the general, special revenue, debt service, and capital projects funds. Included in these funds are the special districts governed by the County Board of Supervisors. The focus of the County s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of the Fiscal Year. At, the County s governmental funds reported combined fund balances of $496 million compared to $477 million in the prior year. The increase of $19 million is partially due to excess revenue over the expenditures. The unassigned fund balance of the Governmental Funds is $7 million. The remainder of fund balance is categorized as follows: 1) Non-spendable $ 14 million 2) Restricted $ 278 million 3) Committed $ 18 million 4) Assigned $ 179 million The General Fund is the chief operating fund of the County. At, unassigned fund balance of the General Fund was $9 million while total fund balance was $204 million. As a measure of the General Fund s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures, including transfers out. Unassigned fund balance represents 3.0% of total fund expenditures and transfers out. The total fund balance of the General Fund represents 65.7% of the total fund expenditures and transfers out. The unassigned fund balance of the General Fund of $9 million remains unchanged from prior year. The County assigns (earmarks) fund balance to a particular function, project, activity, or for purposes beyond the current year. Of the total fund balance in the General Fund of $204 million, $162 million is assigned. The total fund balance of the County s General Fund is $204 million which is $20 million higher than prior year balance of $184 million. Excess revenues contribute to the increased fund balance in the General Fund. The total fund balance of Tobacco Settlement decreased by $4 million. Monies are transferred out for capital projects. The total fund balance of Behavioral Health and Recovery Services decreased by $1 million. Community Services Agency s fund balance increased by $41 thousand as revenues exceeded expenses. 12

35 Management s Discussion and Analysis (continued) Proprietary funds. The County s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The following table shows actual revenues, expenses and results of operations for the current Fiscal Year: Enterprise Funds Major Funds Non-major Other Fink Road Health Clinics Enterprise Landfill & Ancillary Funds Total Operating revenues $ 9,182,481 $ 40,294,012 $ 2,366,621 $ 51,843,114 Operating expenses 10,651,871 42,057,603 13,235,163 65,944,637 Operating (loss) (1,469,390) (1,763,591) (10,868,542) (14,101,523) Non-operating revenues (expenses), net 907, ,824 8,069,072 9,249,484 Net (loss) before contributions and transfers (561,802) (1,490,767) (2,799,470) (4,852,039) Contributions and transfers (4,159,075) 3,620,263 3,909,075 3,370,263 Net income (loss) $ (4,720,877) $ 2,129,496 $ 1,109,605 $ (1,481,776) General Fund Budgetary Highlights As of, General Fund actual revenues were higher than budgetary estimates by $1.4 million. Expenditures based on budgetary basis, excluding other financing uses, were $30 million less than budgetary estimates. The General Fund appropriated $8.5 million in a contingency budget for emergencies and other unanticipated expenses as part of administrative policy. The net increase of appropriations in the Final Budget of $.9 million compared to the original budget is due to the following major variances: County Facilities: Increased capital projects costs Debit Service: Payoff of debt Public Defender: Increased contractual costs Sheriff s Office: Increased payroll and service and supplies costs Public Works: Increased costs Capital Assets and Debt Administration Capital assets The County s investment (net of accumulated depreciation) in capital assets for its governmental and business-type activities as of, amounted to $542 million compared to $539 million in the prior year. This investment in capital assets includes land and easements, roads, highways, bridges, park facilities, structures and improvements, and equipment. The County s total investment in capital assets for the current period increased by $4 million. The net change is due to an increase in construction in progress offset by decrease in infrastructure. Major capital asset events during the Fiscal Year include: 13

36 Management s Discussion and Analysis (continued) Public Safety Center Expansion Projects On May 21, 2018, Stanislaus County opened the Senate Bill (SB) 1022 Re-Entry and Enhanced Alternatives to Custody Training (REACT) Center. The REACT Center is the final piece of a very determined plan to modernize public safety facilities and bring more opportunity for those incarcerated to change their lives and reduce the tragic cycle of recidivism in our community. With the opening of this facility, the Sheriff was able to close the antiquated Downtown Men s Jail, apart from court holdings. The REACT Center was completed on time, three million dollars under budget, and completes the final phase of Stanislaus County s $150 million Public Safety Center Expansion Projects. Other projects included the Day Reporting Center, Project One (Maximum Security and Medical/Mental Health Facility) and Project Three (Intake, Release and Transportation). The REACT project has been recognized nationally, receiving an award from the Construction Management Association of America (CMAA) for new construction over $25 million and was also awarded the 2018 Project of the Year. In addition to the CMAA Award, the REACT project will be receiving the Chairman s Project Achievement Award and the Innovative Project Solutions Award from the Western Council of Construction Consumers and most recently was awarded a Citation by the American Institute of Architects- Academy of Architecture for Justice, which is a very competitive and prestigious award and a Citation is the highest level of acknowledgment. In addition, several site improvements were completed at the Public Safety Center to tie in the campus. Landscaping was added between the new Public Safety Center Expansion projects and the Sheriff s Administration Building. Also, the County created a seating area in the center of the campus to honor fallen deputies and installed seven flag poles to honor the branches of the military service with a display of the United States and State of California flags. Library Projects After a robust community visioning process in Turlock and Empire, the Board of Supervisors approved proceeding with two new Library Projects, the Turlock Library Expansion and Renovation Project and the Empire Library Relocation Project. The Turlock Library Project has successfully completed the programming phase and has started the schematic planning efforts. The Empire Library is in the final stages of the programming phase. The Empire Library is currently housed in an outdated modular building. The Empire Library will be relocated to the Empire Community Park site, adjacent to the Empire Pool and one local elementary school. The new facility and will include separate children, teen, adult, and computer areas. In addition, the space will house a large community room to be enjoyed by the Empire Community. The Turlock Library was selected for improvements in the Library Strategic Plan. When complete, this building will increase the library size from approximately 9,600 square feet to over 14,000 square feet. The new facility will modernize library operations, including a community room, children s area, teen space, quiet reading, adult space and space for the Turlock Friends of the Library. 14

37 Management s Discussion and Analysis (continued) Capital assets for the governmental and business-type activities are presented below to illustrate changes from the prior year: Capital Assets (net of depreciation) Governmental Activities Business-Type Activities Total Land and right of ways $ 45,746,250 $ 44,589,970 $ 15,462,882 $ 15,462,882 $ 61,209,132 $ 60,052,852 Infrastructure 121,375, ,358, ,375, ,358,292 Structures and improvements 140,295, ,216,166 2,946,744 3,542, ,242, ,758,971 Equipment 33,791,546 33,496,706 9,854,414 10,234,341 43,645,960 43,731,047 Intangible assets 691,452 1,026, ,452 1,026,586 Construction in progress 172,030, ,330, , , ,287, ,883,981 Total $ 513,930,818 $ 509,017,868 $ 28,521,488 $ 29,793,861 $ 542,452,306 $ 538,811,729 Additional information on the County s capital assets can be found in Note 5 of the financial statements. Long-term debt At, the County had total long-term debt outstanding of $132 million compared to $139 million as of June 30, A decrease of $7million is due to retirement of the 2012 and 2013 lease refunding, as well as the current year principal payments made on 2006 Tobacco Securitization Note and 2016 lease HVAC financing offset with increase in 2006 Tobacco accreted interest. As of December 2016, Stanislaus County s credit rating is an AA- with a stable outlook from Standard & Poor s Corporation and an A1 with a stable outlook from Moody s Investors Service as of August Outstanding Debt (Principal) Governmental Activities Lease HVAC financing $ 5,435,000 $ 7,390, Lease refunding - 1,562, Lease refunding - 4,990,000 Tobacco securitization note 79,578,611 83,003, Tobacco accreted interest 46,678,793 41,385,756 Capital leases 350, ,410 Total $ 132,042,863 $ 138,885,480 Additional information on the County s long-term debt can be found in Note 10 of the financial statements. 15

38 Management s Discussion and Analysis (continued) Economic Factors and Next Year s Budget The unemployment rate in the County for July 2018 was 6.2% compared to 4.2% for the State of California and 3.9% for the nation. Median home prices increased from August 2017 to August 2018 at the following rate: 9.9% Stanislaus County 5.5% Statewide Building permits for single family units issued in the City of Modesto of Stanislaus County decreased by 17% in August 2018 compared to the prior year. Statewide issuance of building permits for single family units increased by 1,900% for the same period. Assigned fund balance of $13.4 million is being used to balance the General Fund budget for Fiscal Year Requests for Information This financial report is designed to provide a general overview of the County s finances for all those with an interest in the government s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Auditor-Controller s Office, 1010 Tenth Street, Suite 5100, P.O. Box 770, Modesto, CA

39 Basic Financial Statements

40

41 Statement of Net Position Governmental Business-type Activities Activities Total Assets Cash and investments $ 438,328,235 $ 43,444,969 $ 481,773,204 Investments with fiscal agent 85,534,686 78,295 85,612,981 Taxes receivable 18,933,667-18,933,667 Accounts receivable 101,141,374 14,964, ,106,208 Interest and other receivables 3,372, ,711 3,514,274 Notes receivable 211, ,861 Inventory 1,061,629 7,121 1,068,750 Prepaid items 250, , ,007 Loans to other governments 5,204,343-5,204,343 Internal balances 166,193 (166,193) - Restricted cash and investments 4,934,185 20,465,105 25,399,290 Investments - joint ventures 14,917,997-14,917,997 Capital assets (net of accumulated depreciation): Land & right of ways 45,746,250 15,462,882 61,209,132 Infrastructure 121,375, ,375,537 Structures and improvements 140,295,940 2,946, ,242,684 Equipment 33,791,546 9,854,414 43,645,960 Intangible assets 691, ,452 Construction in progress 172,030, , ,287,541 Total capital assets 513,930,818 28,521, ,452,306 Total assets 1,187,987, ,698,964 1,295,686,888 Deferred outflows of resources Deferred pension 223,849,450 12,217, ,067,091 Total deferred outflows of resources 223,849,450 12,217, ,067,091 Liabilities Accounts payable 49,491,731 2,966,829 52,458,560 Salaries and benefits payable 19,410, ,098 20,356,312 Interest payable 134, ,353 Unearned revenue 46,092,782-46,092,782 Deposits from others 18,740 28,617 47,357 Due to other governments 66,467-66,467 Long-term liabilities: Portion due within one year: Risk management liability 15,601, ,343 15,743,940 Capital leases 124, ,976 Compensated absences 9,884, ,994 10,343,431 Long-term obligations 6,560,000-6,560,000 Portion due in more than one year: Risk management liability 21,622,071 76,580 21,698,651 Other post-employment benefits (OPEB) 30,980,193 1,238,795 32,218,988 Net pension liability 555,914,833 22,151, ,066,722 Capital leases payable 225, ,483 Compensated absences 22,657, ,186 23,207,239 Long-term obligations 125,132, ,132,404 Estimated cost of landfill closure/post closure - 9,577,020 9,577,020 Total liabilities 903,917,334 38,137, ,054,685 Deferred inflows of resources Deferred OPEB 1,096,605 43,849 1,140,454 Deferred pension 9,099, ,346 9,478,439 Total deferred inflows of resources 10,195, ,195 10,618,893 Net position Net investment in capital assets 508,145,361 28,521, ,666,849 Restricted for: Capital projects 58,096,747-58,096,747 Debt service 6,118,867-6,118,867 Tax loss reserve 4,934,185-4,934,185 Tobacco 91,077,135-91,077,135 BHRS 21,080,048-21,080,048 Special revenue funds 116,631, ,631,784 Landfill - 20,517,119 20,517,119 Unrestricted (deficit) (308,359,785) 32,317,452 (276,042,333) Total net position $ 497,724,342 $ 81,356,059 $ 579,080,401 The accompanying notes to the financial statements are an integral part of this statement. 17

42 Statement of Activities For the Fiscal Year Ended Fees, Fines, and Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government Governmental activities: General government $ 92,712,210 $ 22,920,329 $ 90,608,924 $ 9,659,079 Public protection 261,440,749 53,230,063 65,662,041 71,181 Public ways and facilities 49,081,627 10,356,902 30,273, ,181 Health and sanitation 161,381,957 53,657,829 79,095,353 55,122 Public assistance 366,132,957 10,376, ,029,912 - Education 13,211, , ,309 17,769 Recreation and Cultural Services 8,414,732 4,740, ,749 34,685 Interest on long-term debt 8,148, Total governmental activities 960,524, ,127, ,851,042 10,105,017 Business-type activities: Program Revenues Landfills 14,678,915 9,182, ,461 - Health Clinics & Ancillary Services 42,664,812 40,652, ,101 - Inmate Welfare/Commissary 1,832,920 1,783,507 18,522 - Transit 7,375, ,114 1,926,012 - Total business-type activities 66,551,846 52,201,372 2,411,096 - Total primary government $ 1,027,075,927 $ 208,328,917 $ 590,262,138 $ 10,105,017 General revenues: Taxes: Property taxes Property taxes in lieu vehicle license fees Property taxes - unsecured Sales taxes Sales taxes - library Sales taxes - road Other taxes Franchise fees Unrestricted investment earnings Miscellaneous Net transfers Total general revenues and transfers Change in net position Net position--beginning Prior period adjustment Net position--beginning, restated Net position--ending The accompanying notes to the financial statements are an integral part of this statement. 18

43 Statement of Activities (continued) For the Fiscal Year Ended Net (Expense) Revenue and Changes in Net Position Governmental Business-Type Activities Activities Total Functions/Programs Primary government Governmental activities: $ 30,476,122 $ - $ 30,476,122 General government (142,477,464) - (142,477,464) Public protection (8,183,790) - (8,183,790) Public ways and facilities (28,573,653) - (28,573,653) Health and sanitation (34,727,007) - (34,727,007) Public assistance (12,119,078) - (12,119,078) Education (2,686,782) - (2,686,782) Recreation and Cultural Services (8,148,825) - (8,148,825) Interest on long-term debt (206,440,477) - (206,440,477) Total governmental activities - (5,301,973) (5,301,973) Landfills - Business-type activities: - (1,740,441) (1,740,441) Health Clinics & Ancillary Services - (30,891) (30,891) Inmate Welfare/Commissary - (4,866,073) (4,866,073) Transit - (11,939,378) (11,939,378) Total business-type activities $ (206,440,477) $ (11,939,378) $ (218,379,855) Total primary government General revenues: Taxes: 63,117,800-63,117,800 Property taxes 60,329,027-60,329,027 Property taxes in lieu vehicle license fees 2,953,151-2,953,151 Property taxes - unsecured 34,035,571 6,022,663 40,058,234 Sales taxes 10,677,064-10,677,064 Sales taxes - library 89,731-89,731 Sales taxes - road 3,884,785-3,884,785 Other taxes 1,190,064-1,190,064 Franchise fees 730, ,268 1,592,582 Unrestricted investment earnings 9,752,619-9,752,619 Miscellaneous (3,370,262) 3,370,262 - Net transfers 183,389,864 10,255, ,645,057 Total general revenues and transfers (23,050,613) (1,684,185) (24,734,798) Change in net position 541,132,694 83,618, ,751,340 Net position--beginning (20,357,739) (578,402) (20,936,141) Prior period adjustment 520,774,955 83,040, ,815,199 Net position--beginning, restated $ 497,724,342 $ 81,356,059 $ 579,080,401 Net position--ending The accompanying notes to the financial statements are an integral part of this statement. 19